HYBE’s Stock Plummets as Management Takeover Scandal Unfolds

Evidence of Min Hee Jin, from ADOR, attempting to seize control of HYBE without majority shareholder approval
HYBE stock price drops over 7%
Market cap equivalent to YG Entertainment evaporates in a day

Min Hee Jin, the CEO of ADOR and known as the mother of the popular girl group NewJeans, has caused a stir in the entertainment industry as evidence of her trying to seize control of HYBE without the consent of the majority shareholder has emerged.

According to industry sources on the 22nd, HYBE recently sent audit inquiry letters to Min Hee Jin, the CEO of ADOR, and deputy representatives.

The inquiry letter includes evidence suggesting that the ADOR management team sought to gain control, suspicions of external consulting, and allegations of irregularities in personnel recruitment.

It’s alleged that the ADOR management team devised a plan to sell the 80% stake in Adore, held by HYBE, to investors sympathetic to the current ADOR management team. This plan inflamed public opinion by claiming that HYBE imposed unfair demands on ADOR.

Following the news, HYBE’s stock price plummeted.

The stock price of HYBE ended the day at 212,500 won ($179), down 7.81% from the previous day. At one point, it fell by more than 10%.

The market cap also significantly shrunk, with the stock price falling over 7%. The market cap, which was 9.6 trillion won ($8.1 billion) based on the closing price on the 19th, decreased to 8.85 trillion won ($7.5 billion). The evaporated market cap amounts to 750 billion won ($632 million).

In disbelief over the situation, investors reacted with self-deprecating humor as the market cap fell, saying, “It’s like YG Entertainment’s market cap just disappeared.”

Indeed, YG Entertainment’s market cap was 818.7 billion won ($689 million) on the day.

NewJeans is also known for boosting HYBE’s stock price right after their debut.

In June 2022, before NewJeans’ debut, the announcement of BTS’s hiatus led to a 27.98% drop in HYBE’s stock price to 139,000 won ($117), recording a 52-week low immediately after the market opened.

Shortly after, when NewJeans’ first music video was released, HYBE’s stock price ended the day higher.

As per the Korea Exchange’s records, HYBE’s stock closed at 167,000 won ($141), marking a 6.37% increase from the previous trading day. The next day, there was a further surge of 5.69%, a remarkable 12% rise within two days. By the 22nd, merely a month after Newjeans’ debut, the stock concluded trading at 184,000 won ($155).

The securities market also evaluated HYBE as a stock with ” high investment appeal, considering the growth potential of NewJeans.”

Recent reports suggest that HYBE is anticipated to be classified as a conglomerate group, marking a first in the entertainment industry.

According to the Financial Supervisory Service’s electronic disclosure system on the 8th, HYBE’s asset size as of the previous year’s third quarter stands at 5.52 trillion won ($4.65 billion). This is the combined figure of 16 affiliates, including Weverse Company, Big Hit Music, and Pledis Entertainment.

The Fair Trade Commission designates conglomerate groups and their respective heads yearly based on a total asset amount surpassing 5 trillion won ($4.2 billion). Therefore, HYBE is set to be listed as part of the conglomerate group this year.

However, the Fair Trade Commission issued a subsequent clarification the following day, affirming, “There has been no decision yet regarding the designation of conglomerate groups subject to disclosure, such as HYBE.”